Text Of Gov. Wolf’s Natural Gas Severance Tax Proposal Now Available

Gov. Wolf Wednesday distributed the text of bills needed to implement his proposed FY 2015-16 budget to leadership in the Senate and House, including the natural gas severance tax.

There are two parts to the proposal.  One part would re-enact the Act 13 drilling impact fee, but changes the allocations for some categories and the second part is related to the enactment of a new proposed severance tax.

Drilling Impact Fee

The proposal would change the allocation of the impact fee revenue in several ways based on specific appropriations and not on a percentage of the impact fee revenue received as it is now in Act 13--

-- $8 million would be divided equally between county conservation districts and the State Conservation Commission which oversees districts.  Presently districts and the Commission receive $7.5 million annually.

-- $1.2 million to the Fish and Boat Commission which presently receives $1 million.

-- $6.2 million for DEP for oil and gas well regulation.  DEP now receives $5 million.

-- $950,000 to the PA Emergency Management Agency.  PEMA now receives $750,000.

-- $950,000 to State Fire Commissioner which now receives $750,000.

-- $2 million to PennDOT for Rail Freight Assistance.  PennDOT now receives $1 million.

-- $123.1 million, a specific amount, to local governments impacted by drilling instead of provision in Act which allocates 60 percent of the fees.  The further subdistribution of these funds is the same.  The use of the funds remains the same by local governments.

-- $9.6 million to the PA Housing Finance Agency which had received $5 million.

-- $82.1 million would be distributed, instead of a percentage of the impact fees, to--

     -- $16.5 million to the Commonwealth Financing Authority for abandoned mine reclamation, plugging orphan wells, funding local sewage facility improvements, recreation and greenways, water quality monitoring;

     -- $8.2 million to Environmental Stewardship (Growing Greener) Fund which received the same amount from in FY 2014-15.

     -- $20.5 million to PennDOT Highway/Bridge Improvements which received the same amount in FY 2014-15.

     -- $20 million: $11 million to PennVEST and $11 million for the Commonwealth Financing Authority H2O Program for water infrastructure improvements.  Both agencies received a percentage of the impact fee which amounted to $10.2 million each in FY 2014-15.

     -- $12.5 million for county recreation planning, development and rehabilitation, the same as the program received in FY 2014-15.

     -- Any funds remaining would be transferred to the Hazardous Sites Cleanup Fund which received a percentage of the impact fees previously.  $4.1 million went to the Fund in FY 2014-15.

-- If any impact fee revenue is left after the specific allocations above--

    -- Up to $10 million to DEP for Oil and Gas regulation and abandoned well plugging.

    -- Up to $15 million beginning in July 2016 for county recreation planning, development and rehabilitation.

    -- Up to $30 million beginning in July 2017 to DCED for economic development.

    -- Up to $55 million beginning in July 2018 to DCED for economic development.

Proposed Severance Tax

The proposal would enact a 5 percent severance tax plus a 4.7 cents per MCF tax on natural gas, based on a minimum natural gas price of $2.97 cents per MCF which would support public education.  Legislative language on the education funding allocations based on severance tax revenue is contained in a separate proposal.

A copy of the legislation is available online.
The text of other legislative proposals to implement Gov. Wolf's budget are also available.